Apple buyers could be in for a sour week.
With the iPhone maker gearing up to report its fiscal third-quarter earnings after Tuesday's closing bell, investors might be getting a little too comfortable ahead of the results, Michael Khouw, co-founder and chief strategist at Optimize Advisors, said Monday on CNBC's "Options Action."
"Apple is a name that typically moves about 6% on average the week that they report," Khouw said, referencing data from the last eight quarters. "Right now, the options market is implying a move of about 4.3%, and a smaller-than-average implied move usually reflects some level of complacency by the options markets."
That means investors could be in for a disappointment — and, on Monday, some mystery traders were betting on just that.
"The put-call ratio was about double its average, so puts out-traded calls, which is uncommon for Apple," Khouw said of the bearish bets placed in Monday's trading session.
"One of the trades that I noted, actually, was the August [$]195 puts," he said. "Somebody bought a little over 4,000 of those. They paid about $1.50. So, the buyer of those puts is making a bearish bet that Apple could fall below that 195 strike price by at least the $1.50 that they paid, so that would represent a fairly good-sized decline from where it's currently trading."
When that trade was placed Monday, the mystery buyer was betting that Apple could fall 8% from its then-current levels. At Tuesday's levels, the presumed drop was closer to 7%.
"So, not everyone, apparently, is as sanguine as the implied move would suggest that they might be," Khouw said.
And, to some, Apple looks like it could endure market weakness for a while.
"I do think there's a real chance that the market's going to fade their earnings release tomorrow," Guy Adami, director of advisor advocacy at Private Advisor Group, said in the same "Options Action" segment. "So, I'm sort of in the ... 'beware' camp."
Brian Kelly, founder and CEO of BKCM, said in the same segment that Apple's stock looks "kind of sleepy" with tangible business drivers like the 5G boom still far out on the horizon.
"I think everybody's more concerned about what services are going to be. They don't really have a great product in the service area. They haven't had one ever, so they're still a handset company," Kelly said. "I think there's a lot of room for disappointment. If the stock is down 5[%], 10% from here, then maybe you can revisit that 5G play. But I don't think it's today."
Karen Finerman, co-founder and CEO of Metropolitan Capital Advisors, wondered if the complacency around Apple could create an opportunity for nimble traders to buy in.
"Let's say we start to see 5G nearer and nearer on the horizon. Does it give them a pass for crappy quarters until then?" she said in the same segment. "If that's the case, then you have either crappy quarters or good quarters until then, and if they're not going to be penalized for crappy ones, well, then maybe the risk-reward's interesting."
Apple shares were down less than 1% midday Tuesday.